A board of directors is an elected group of people who represent the interests of a business. The board includes the chief executive officer (CEO) and top managers and eminent people who aren’t involved in day-today operations. It oversees management and establishes high-level strategies. It meets regularly to review and evaluate the performance of the company. It also approves and ratifies important corporate transactions, such as mergers or acquisitions, stock splits and new product launches, and so on. The board also establishes guidelines for the CEO’s compensation and other executives, and ensures that they are in line with the organization’s goals. It also manages risks and oversees financial performance and operations which includes the preparation of annual budgets as well as reports.
A great board requires an array of perspectives and expertise. The best boards are highly engaged and proactive, addressing issues that could impact their businesses, such as strategic focus and culture, succession of leadership and management of talent, governance resilience and risk digital transformation, sustainability and possible mergers and acquisitions. They provide oversight and input on these topics while maintaining the vital distinction between their responsibilities and those of management.
To perform their roles and responsibilities effectively, the most efficient board members work closely with the CEO, allowing them to better understand the company’s goals and strategies, as well as the risks and challenges. They are ready to engage in a meaningful debate that focuses on strategic planning, oversight and accountability. They make decisions that are in the best interests of the company, while also maintaining their independence and avoiding conflict of interests.
